A Structuring Chaos Blog

Slow Down, I Suppose

As many of us have said, it looks like we’ll be hitting the gas on the way to our nice fiscal cliff for the end of year. At this point, Congress will plan on voting for SOMETHING on the way out of town and just not come back while the president will likely give pressers from Hawaii about how Republicans suck for being Republicans. If the polls show him really losing out, he’ll toss all of Congress under the bus.

Barring a last-minute panic from the White House (and I just don’t see it… even if admin pros are worried about the bad PR, the president appears not to be), it looks like Republicans will push a tax relief bill through that keeps the tax rates lowered on most people (everyone below $1M income) and fixes AMT for another year. It’s unclear to me whether this would actually pass, but I’d bet that the middle of both sides of Congress sighs and passes this while whining the whole time. Sequestered funds will not be covered, which will cause much wailing and gnashing of teeth… maybe.

I see two things happening on the part of the Republicans at this point. First, they can say they came with compromise, and passed a bill that “taxes millionaires” like the Obama administration has been saying. This also allows them to go back to their constituents and brag that the last debt ceiling debate actually did lead to cuts, though the cuts are all in spending and don’t touch entitlements. They figure that this will engender support in the base that would allow them to take the fight to the next debt ceiling debate in a way that lets them go after entitlement funding.

While I’ve never posited that blind luck is a strategic plan, it appears that the Republicans could actually benefit from it at this point. They didn’t as much make their own luck (which is a strategic plan) as they did stumble into it after the last panic. However it works, I wonder if there’s also something else going on.

What if there’s a feeling that the longer the debt and taxes sit in the forefront of the public’s mind the less that Congress otherwise has to address? Clearly gun control is going to be a major agenda item for the next session (though I don’t think it’ll go far, more on that later). But maybe the Republicans feel that a constant harping on debt, taxes, fiscal responsibility, etc. will actually allow them to keep other spending proposals and new deals off the table. How can Congress address immigration reform, for instance, when they can’t even pass a budget?

If this is true, then maybe I’ll have to take back what I’ve said about the R side for a bit. They clearly lost the last election, and they know they’ll lose the next one if they look like total obstructionists. But if they merely keep the focus on one or two big issues, the rest might have to sit on the side burner, and maybe 2014 will give them some power back.

I can’t tell yet, but I want to see where this goes. In the mean time, enjoy two more weeks of debt press.